It appears precious metals are once again enticing investors. After ignoring gold and silver for much of 2015, investors added nearly $400 million to U.S. exchange-traded funds backed by precious metals through October 20th. That figure represents the largest ETF inflow since February. Bullion sales at both the U.S. and Royal Canadian Mints surged over the summer. Gold and silver seem to be gaining favor based on expectations that the Federal Reserve could wait until early 2016 or later to raise interest rates. Statistical data attempting to show a correlation between interest rates and commodity prices are inconclusive. Higher interest rates have historically taken money out of the stock market. Whether those funds go into precious metals or fixed income options often depends on the political climate at the time.
Recent depressed prices for precious metals have led to the usual market response, a surge in physical demand for bullion coins and bars globally. This is not only confirmed by the volume of our local and national sales of late, it’s confirmed by sales figures and production issues at both government and private mints and refiners. There have been frequent shortages of many of the most popular silver and gold bullion items both locally and nationally over the past several weeks. Here at Jack Hunt Gold & Silver we have been out of virtually every product we offer at one point or another over the last month. Ultimately these production glitches, delivery issues and shortages have led to rising premiums on physical metal.
The US economy hasn’t fully recovered from the last recession, what many have referred to as the worst since the Great Depression, but another economic downturn could be looming in the not too distant future, according to one prominent economist.
Almost a century of tradition will disappear from the gold market as technology finally takes over. Thursday March 19th was the final day that traders at four Bullion Banks conversed by phone twice daily to determine the London Gold fix. The London Gold fix is used by miners, central banks, precious metals brokers and jewelers amongst others to deal and value gold bullion. Gold was the last precious metal to drop the traditional London fixings after silver, platinum and palladium converted to electronic auctions last year. Deutsche Bank AG triggered these reforms in 2014 when they abruptly withdrew from the precious metal benchmark process after allegations of price manipulation.
Chart courtesy of www.macrotrends.net
For many investors, the gold-to-silver ratio is one of many indicators used to determine the right (or wrong) time to buy or sell their precious metals. Other factors… including economic uncertainty, inflation concerns, fiat currencies and government debt have encouraged millions to invest in gold and silver. Yet to many the gold-to-silver ratio is a vague elusive mystery.
You’ve just left our offices with a huge sack of gold and silver and suddenly it hits you… “Where do I put all of this valuable metal?” Maybe you should think about properly storing and protecting your metal prior to buying it.
When most of us think of precious metals gold tends to be our first thought. Silver, the less expensive of the two, tends to be relegated to second place. Silver is often thought of as similar to gold in that it’s pretty in jewelry and has always had value, but it’s fundamentally of no use to society. You could make that argument about gold which is why investors should look at gold as more of a currency than a commodity. Silver, contrary to gold, does have significant industrial and practical applications. Approximately half of all the silver produced globally is used by industry, the balance being used as jewelry or for bullion.
The mainstream financial media are finally admitting to what gold bugs have been claiming for years. The gold market is manipulated.